Cipla divests animal health business in South Africa, sub-Saharan Africa

The deal comes with a potential revision linked to FY17 performance along with customary adjustment (within the price band of 250 mn Rand and 500 mn Rand) in relation to working capital and net debt/cash adjustments.ET Bureau | March 06, 2017, 08:43 IST

MUMBAI: India’s third-largest drugmaker Cipla said it sold its animal health business to South Africa’s Ascendis Health, as part of the company’s strategy to focus on consolidating its business to strategic markets. Cipla Agrimed and Cipla Vet, with businesses in South Africa and sub-Saharan Africa, will be divested from the parent company for ZAR 375 million or Rs 37.5 crore through its wholly-owned subsidiary Inyanga Trading 386.

The deal comes with a potential revision linked to FY17 performance along with customary adjustment (within the price band of 250 million Rand and 500 million Rand) in relation to working capital and net debt/cash adjustments.

Cipla Agrimed operates in the farm animals segment with sales in agricultural co-operatives and bulk farm purchasing organisations. It leads in antimicrobials and endectocides in South Africa, the company said. Cipla Vet operates in the companion animal segment with sales primarily to wholesalers.

“Cipla has taken the strategic decision to divest and sell its veterinary division. In line with this new strategy, the company will increase its focus and efforts to advancing healthcare for all South Africans. By doing this, Cipla will have a more intensive approach to grow our portfolio of quality and affordable products in the South African healthcare sector,” said Paul Miller, chief executive officer, Cipla South Africa.

In the last one year since Cipla has been ridding of its non-core assets, a strategy under its new management led by Umang Vohra, who wants the company to concentrate its business in US and domestic markets. It has withdrawn from its business in Europe a year ago, besides selling its ‘incubator’ company Chase Pharma to Allergan.

A late entrant to the US market, Cipla, in 2015 through its acquisition of Invagen for $550 million, is waking up to the reality of ignoring the crucial North American market, which has been a pot of gold for Indian drugmakers. For the quarter ended December 2016, Cipla reported a 44% jump in its profit to Rs 375 crore led by revenues from asset sales and a strong domestic business. The company’s guidance includes 20-25 drug filings in the US market, which it said belongs to limited competition segments.

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